I had an invitation to bid on a government contract that needed local diversity certifications that would cost a bunch of money just to apply. They also had a scale down provision to basically nothing so even if we won there is no guarantee that the contract would cover the cost of certifications. We have list pricing so they wanted us to jump through these hoops and still give them the standard rate. We passed, but if this is our future we’ll have to stop doing list pricing and start charging 5x to 10x extra to cover the hassle of dealing with them.
Now you know why government contracts are so expensive. They have to be, to cover the costs of dealing with the government.
It's not wrong to over-quote a shitty customer by an amount that'd make you willing to deal with their shittiness. That's totally fine on your part actually, since either they take the bid and you make money, or they don't and you don't have to deal with them.
We do list pricing to cut down on marketing costs. Many tenders disallow increasing the price of deliverables over list pricing (it’s an automatic disqualification). You can’t throw in extra stuff either as they reserve the right to remove specific line items after awarding the tender. They write the rules to benefit themselves.
The only way I can increase prices is if I stop having an advertised price and go to a pure ‘contact us for pricing’ model. I can either be mass market at commodity prices or I can target governments at inflated costs but I can’t do both. We’re the last hold out in my niche and eventually we will have to leave the commodity market.